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Economics Healy
Economic Systems
| Term | Definition |
|---|---|
| Economic System | method used by society to produce and distribute goods and services |
| 3 Key Economic Questions | What goods and services should be produced: Ex: Education How should the goods and services be produced? Ex: Water, nuclear power Who consumes the goods and services? |
| Incentives | Financial rewards given to consumers to alter there consumptions and production habits (quotas) |
| Characteristics of a Free Market | private ownership, freedom of choice, self-interest, buying and selling platforms, competition, and limited government intervention |
| Consumer Sovereignty | the economic concept that the consumer has some controlling power over goods that are produced |
| Self Interest | the idea that the best economic benefit for all can usually be accomplished when individuals act in their own self-interest. |
| 1 Key economic question | what goods and services should be produced? |
| 2nd key economic question | How should the goods and services be produced? Water or nuclear power? |
| 3rd key economic question | Who consumes the goods and services? |
| 6 Economic Goals | Economic Efficiency, Economic freedom, Economic stability, Economic equality, Economic Security, Economic growth and innovation |
| Competition | When there's competition firms have to compete for customers, it leads to lower prices, higher quality goods and services |
| Adam Smith | He believes in free market and laissez faire |
| Karl Marx | He is the father of communism. Wrote Communist Manifesto. |
| Laissez Faire | a hands off government approach. The gov doesn't get involved in a lot of decisions |
| Invisible Hand | The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium |
| Specialization | concentrating efforts in a limiting number of areas |
| Privatization | occurs when a government-owned business becomes owned by a private, non-government party |
| Characteristics of CPE (centrally planned economy) | Provide economic equality to all. (North Korea, Cuba, China) |
| Transition economies | Economies in the process of moving from CPE to Free market |
| Traditional economies | a system that relies on customs, history, and time-honored beliefs. |
| Mixed economy system | Combines aspects of both capitalism and socialism. A mixed economy protects private property with some gov support |
Created by:
weire
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